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Informist, Monday, Nov. 18, 2024

By Alina Geogy

MUMBAI – Indian equities are expected to test lower levels again on Tuesday. Analysts expect investor sentiment to remain dampened after comments by US Federal Reserve Chair Jerome Powell hinted at a slower pace of interest rate cuts in the US. However, some expect a slight bounceback over the next few days after the seven-day decline in the Nifty 50.

The Nifty 50 is down nearly 11% from its all-time high hit on Sept. 27. This correction, coupled with the continuous decline for seven days, has pushed the Nifty 50 into oversold territory, said Brijesh Ail, head of technical and derivatives at IDBI Capital Markets & Securities. Some recovery could be expected on Tuesday, which could take the Nifty 50 up to 23900-24000 points, he said. On Monday, the Nifty 50 ended at 23453.80 points, down 78.90 points or 0.3% and the BSE Sensex ended at 77339.01 points, down 241.30 or 0.3%. 

Powell's comment that policymakers in the US are in "no hurry" to cut rates came as a negative surprise for investors, who had hoped for further loosening of monetary policy at the Fed's December meeting. Information technology stocks took a beating on Monday as investors reacted to Powell's comments and its implications. Shares of IT firms such as Wipro, Infosys, and Tata Consultancy Services, ended 2-3% lower and weighed on the Nifty 50. These stocks are expected to fall for at least a day or two more, Ail of IDBI Capital said, adding that the long-term view for the sector remains positive. Investors can buy into the correction for stocks such as TCS, Tech Mahindra, and Persistent Systems, he said.

Metal and real estate stocks were the top gainers in the session Monday and analysts expect these to rise more in the next session. Metal stocks gained on Monday after China said it would end a tax rebate policy on various commodities such as aluminium. China's move may move China-dependent countries to seek aluminium from other players such as India amid limited global production capacity, analysts said. Shares of Hindalco Industries and National Aluminium Co. ended up nearly 4% and over 9% higher, respectively. As a result, the Nifty Metal rose nearly 2% and became the top gaining sectoral index. Hindalco is seen gaining more over the next few days, but the gains for Tata Steel are seen capped as the stock trades near a strong resistance of INR 150, Ail of IDBI Capital said.  End

Edited by Avishek Dutta

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